Tax relief in France

The French government has introduced a wide range of financial measures to help combat the impact of the coronavirus pandemic on both businesses and the general public, and one of the key areas of change has been in providing tax relief in the present circumstances.

Tax relief measures have been implemented in a variety of ways – from access to aid payments that will not be taxable, to allowing delays and greater leniency on deadlines, to enable businesses to make their tax bills more affordable. With a variety of options available, this will come as a relief to many French businesses that have been impacted by the effect of the lockdown on their business and income.

Deferring tax payments

While ordinarily, a late payment of taxes would incur a severe penalty for a business, the French government has permitted businesses to apply for a deferral of tax payments, in order to make payment instalments more affordable and manageable.

Deferrals can be requested for direct taxes, including for corporate income tax, corporate property tax, payroll tax and value added tax. A deferral can be granted for up to three months, and you do not need to provide a reason when applying.

However, the French tax authorities have warned that businesses should not simply stop any direct debit measures that are in place with their banks, as this may result in a request for the entire amount due in one payment.

Early repayment of tax credits

As well as delay any payments due, businesses can also apply for an early refund of any tax credits that they are eligible for, without having to wait to submit the annual income tax return.  This is available for both competive and employment tax credits and innovation tax credits, as well as any VAT credits that are due back.

In order to apply for a credit refund, businesses will have to complete and submit the relevant forms available with the tax authorities, and ensure that they meet the relevant criteria correctly.

Reduction in down payments

Another measure offered to businesses is the option to limit a monthly down payment for businesses that have either suffered a severe downturn in turnover, or have had to cease trading during the lockdown. The amended figures are 80% and 50% of declared VAT respectively.

Alongside tax rebates and other measures, the French government has also introduced a wide range of other supportive measures, including allowing employees to claim partial unemployment benefits while remaining employed in order to prevent mass job losses, and access for self-employed and small businesses to a solidarity fund, to help survive through the difficult period. These measures will continue to change and adapt as the country moves through the gradual easing of restrictions from the lockdown – however, as it will still be sometime before the country can return to pre-pandemic levels of activity, it is likely that tax and other financial support measures will need to continue to be in place for the near future.

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